Slower rate increases in US P&C but no sign of softening, says USI

Property rates in the US are expected to increase, but not at the same pace as seen in 2023, while the pace of casualty rate increases is moderating, although not anywhere close to a softening market, according to USI Insurance Services. In its 2024 US Property & Casualty Market Outlook, the US broker says that natural catastrophe losses continue to increase by 5% to 7% annually, but it expects a return to minimal valuation increases in 2024. “Our forecast calls for 5% to 15% rate increases for non-CAT property with minimal loss history and good risk quality; 15% to 30%+ for CAT-exposed property with minimal loss history and good risk quality; and 15% to 30%+ rate increases for those risks with poor loss history or poor risk quality,” says the outlook. It notes that the higher end of the ranges are reserved for risks with a large concentration in values in critical CAT zones, insureds facing non-renewals by incumbent insurers, insureds with unresolved risk quality issues or insureds with large, unsettled claims. USI expects the majority of renewals to finish with less than a 20% rate increase. On the general/products liability side, flat to 5% rate increases are predicted, although many organisations continue to switch to loss-sensitive programmes despite rate moderation to further reduce their cost of risk, the outlook says. Rate increases for umbrella/excess will be limited to 5% to 15%, and markets will offer increased limits of $15m to $25m. “Entering 2024, the market is now in its sixth year of rising rates for GL/products and umbrella/excess,” the outlook states. “Although rate adequacy is slowly being achieved for a growing number of insureds and the pace of rate increases is moderating, we are still not close to entering into a softening market characterised by flat or reduced rates for most insureds. Social inflationary pressures and rising claims inflation will still negatively impact a subset of insureds with high historical loss severity and frequency, as well as those in industries perceived to be inherently hazardous.” It goes on: “Underwriters are aware of the rate fatigue created by these multiple years of increases, and the mounting frustrations of insurance buyers across multiple coverage lines, including GL/PL and umbrella/excess. Insurance companies will introduce selective competition, which means they will be willing to cover only certain risks, market segments, geographic regions, customer demographics and other factors.” Looking at other lines, USI says the rate and pricing environment in most states for workers’ compensation should continue to remain competitive in 2024 for both buyers of guaranteed cost and loss-sensitive programmes, with rate reductions being more common than rate increases. For auto liability insurance, virtually all providers continue to push for rate increases. Despite the cyber threat landscape becoming even more perilous, rates have been stable, with renewals flat to up 15%, and USI expects rates to remain the same in 2024. For public company D&O, rates will be flat to down 7.5% in the first half of 2024.

Slower rate increases in US P&C but no sign of softening, says USI

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